Global Custody Pro - 6 June 2025

SS&C, Insignia, ISDA, Firebrand Research T+1 Report, CLARITY Act, Solana, and more

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Global Custody Pro
June 05, 2025 • Reading Time: 9 minutes

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📰 Welcome to the Newsletter

Welcome to Global Custody Pro! I'm Brennan McDonald, Managing Editor. I write about the global custody industry after 12+ years in financial services, including working at a global custodian. An AI voice reads the audio version of this newsletter. Have feedback? Just reply to this email or connect with us on LinkedIn.

📠 Editor’s Comment

I’m working on an overview of AI transformation in global custody operations. Increasingly, after spending more time experimenting with AI tools this year, I think the framing around incremental change will require a shift in thinking from global custody executives.

By replying to this email, let me know what you think about AI transformation in global custody. I plan on publishing a long-form paper on this topic in the coming weeks. The main contention I’m considering is how incremental change can compete against an AI-first mindset in transforming operating models across functions.

Table of Contents

🌏 Global Custody News

EU, UK T+1 Shift Demands Focus on Costs and Complexity

Source: Firebrand Research report

  • Driving the news: Firebrand Research's June 2025 report, "Tackling Post-Trade Friction," reveals European and UK firms face substantial operational and financial hurdles for the 11 October 2027 T+1 settlement transition. Global custodians could see project budgets reach up to US$36 million for European T+1, with people costs being a primary driver, mirroring experiences from the North American move.

  • The big picture: The report underscores persistent post-trade inefficiencies, noting €70.43 million in average monthly penalties for Target2-Securities (T2S) settlement failures in 2024. Interviewee settlement failures in 2024 were primarily caused by counterparty shorts (71%) and data issues, including incorrect or stale standing settlement instructions (SSIs) (21%). While interviewee firms average 83% automated central matching for equities and 71% for fixed income, the transition demands further automation and addressing the complexities of Europe's diverse market structures and practices, which make its T+1 shift more challenging than North America's.

  • Go deeper: Key insights for navigating the transition include emulating North America's focus on early preparation and testing, ensuring trades are confirmed on trade date to allow faster issue resolution, and implementing robust client education programmes. The report highlights the necessity for firms to conduct settlement failure root cause analysis, improve SSI management through standardisation like FMSB SSI standards, and modernise legacy platforms. Addressing concerns such as FX market alignment (a worry for 67% of interviewees) and place of settlement (PSET) matching (67%) is also critical.

SS&C CFO Details Growth Outlook

  • Driving the news: SS&C Chief Financial Officer Brian Schell detailed the company's financial outlook and growth strategy, projecting approximately $6.2 billion in revenue with around 4.5% organic growth for the current year, and a three-year organic revenue growth target of 4-8%. Key drivers include expanding client services, new products, cross-selling, international expansion, such as the Australian Insignia "lift-out" (expected to contribute $35-$70 million annualised revenue), and a focus on similar large-scale operational outsourcing deals.

  • The "lift-out" model, as demonstrated by the Insignia partnership, which involves SS&C taking on 1,400 Insignia employees, indicates a strategic focus on providing comprehensive outsourced operational services to large financial institutions. SS&C’s objective for these arrangements is to deliver "enhanced, higher quality, more accurate, and more efficient" services by leveraging its scale and proprietary technology platforms.

  • SS&C plans to pursue further "lift-out" opportunities and international growth, particularly in the Australian superannuation sector, as significant organic growth avenues. This is complemented by a disciplined M&A strategy aimed at acquiring businesses that leverage SS&C's existing products and geographies, and continued investment in research and development to support long-term growth. The company highlights that it owns the software it uses to service clients, ensuring "no supply chain issue."

CMC Markets Reports FY25 Financials

Unveils Third Vertical in DeFi and Web3

www.globalcustody.pro/p/cmc-markets-reports-fy25-financials

Wise FY25 Results

Income Grows, US Dual Listing Proposed

www.globalcustody.pro/p/wise-fy25-results-2fb4

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🚀 Digital Asset News

ISDA: UK Crypto Draft Scope Risks Collateral

  • Driving the news: The International Swaps and Derivatives Association (ISDA) submitted feedback to HM Treasury on its draft 2025 crypto asset regulations, expressing concerns that the proposed definition of "safeguarding" is overly broad. ISDA states that this broadness, with an unclear "control" interpretation, could unintentionally bring standard derivatives collateral arrangements under the new regulatory activity.

  • Why it matters: ISDA anticipates that this potential inclusion of established collateralisation practices under a new licensing requirement would "create significant disruption and operational burdens" for market participants. It could also create an uneven playing field for "relevant specified investment cryptoassets," like tokenised securities, by diverging from established practices for non-tokenised equivalents, an outcome ISDA states would not be "technologically neutral".

  • Go deeper: ISDA recommends that HM Treasury clearly delineate that standard collateral arrangements and securities financing transactions are outside the safeguarding activity's scope. To achieve this, the association suggests refining the "safeguarding" definition, strengthening exclusions, and providing clear guidance on "control."

CLARITY Act to Define Digital Asset Regulation, Custody Rules

  • Driving the news: According to a Jones Day bill summary, U.S. House lawmakers introduced the bipartisan Digital Asset Market Clarity (CLARITY) Act of 2025 on 29 May 2025, proposing a comprehensive regulatory framework for digital assets. This framework would delineate the oversight of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) and establish a provisional registration regime for crypto intermediaries.

  • The Bill clarifies that regulators generally may not require financial institutions to include customers' digital assets as liabilities on their balance sheets. This provision is consistent with the SEC's SAB 122 and the rescission of SAB 121, impacting institutional accounting for custodied assets.

  • The proposed legislation directs the SEC and CFTC to collaborate with foreign regulators. This collaboration is intended to allow cross-border information sharing concerning digital asset oversight.

Sol Strategies Boosts Staked SOL via Lane Deal

  • Driving the news: Sol Strategies acquired Lane, a Solana validator operation, in its fiscal second quarter ended 31 March 2025. This increased its total staked assets by 113% to 3.39 million SOL and expanded its support to over 5,500 unique wallets. Leo Wald, CFO, described the quarter as a "watershed moment in our transformation."

  • The big picture: The company stated the acquisition and growth position it "among the largest validator operators on the [Solana] network" and, coupled with recent SOC 1 and SOC 2 Type 1 compliance certifications alongside existing ISO 27001, is aimed at "setting the institutional standard for secure and transparent staking." Sol Strategies reported staking and validating income of $2.53 million for the quarter, an increase of 104% from the prior quarter. However, it recorded a total comprehensive loss of $32.5 million, primarily due to a $27.7 million non-cash unrealised loss on cryptocurrency holdings.

  • Go deeper: Sol Strategies announced its intention "to become the first public company to tokenise equity on Solana" and has filed for a planned uplisting to the NASDAQ. The company highlighted its strategy of expanding its institutional client base through integrations, such as becoming a preferred validator within BitGo's institutional platform, and securing mandates like the partnership with DigitalX.

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